N5 Business Management

• What do business need to deal with to survive?

  They must be able to deal with CHANGES that take place in their environment. Speed of change in the world is very rapid today.
• What are internal factors?

  Pressures from within which forces the business to make changes in the way it's run.
• What are 3 internal factors that can cause change?

  Finance avalible, HR avalible an technology avalible.
• Describe what is meant by finance avalible?


  Lack of finance - cannot grow, buy new premises, develop new prodcuts, purchase new tech or hire new staff due to this. Business may go bankrupt if unable to find cash to pay debts.
• State what is meant by human resources?

  The skill, ability and number of staff a business has.
• Describe what is meant by human resources avalible?

  Employee attitude, employees who participate in training, employees being receptive to new ideas, managers with mreo experience.
• Describe what is meant by employee attitude?

  Their attitude can reflect the quality of the work (either positive or negative impact)
• Describe what is meant by employee participation in training?

  Employees who implement their training into work should produce more/better quality product.
• Describe what is meant by employees being receptive to ideas?

  This means the new ideas can help managers introduce change.
• Describe what is meant by managers with more experience?

  Managers are likely to make better decisions.
• What can technology impact?

  It can influence their operations
• What are some examples of negative impact on technology?

  Machinery being outdated, machinery already working at capacity.
• What affect does technology have on business?

  Effciency > less capital required, quality and quantity of products. May not be able to compete with competitors.
• What are the 6 external factors?

  PESTEC - Political, Economic, Social, Technological, Environmental, Competitive
• What are political factors?

  Legalities/laws that restrict what a business can do (e.g national minimum wage, no smokers in bars, no misleading products etc). They must comply with the law or face heavy penalties.
• What is the impact of the government increasing national minimum wage?

  Costs for business increases, prices may increase.
• What is the impact of new health and safety legislations being passed?

  Staff need training > decrease in productivity, costs may increase (new equipment needed)
• What are economic factors?
• What happens during recession?

  Unemployment rises > consumers have less money to spend (affects sales)
• What is the impact of recession?

  Lower demand for goods and services, sales and profits fall, workers made redundant.
• What is redundancy?


  Letting go of staff and not replacing their position.
• What happens during an economic boom?

  Economy grows rapidly
• What is the impact of an economic boom?

  Sales and profits grow, organisation invests in developing new products (expanding), increased workforce (recruiting)
• What happens during unemployment?

  Number of people who are unemployed can increase and decrease.
• What is the impact of unemployment?

  Less demand for luxury products by unemployed people, sales and profits fall, hard to recruit new employees, higher wages may need to be offered.
• What are interest rates?

  Interest rates are extra money you have to pay (e.g bank interest must be paid on a bank loan). Rates can increase/decrease depending on economic condition.
• What is the impact of interest rates?

  Put off expansion if interest rates are too high, business with high debt at risk of business failure due to increase in repayments.
• What happens in inflation?

  Price of goods/services increases, wages do not increase in line with inflation.
• What is the impact of inflation?

  Citizens have to make their wages go further - may stop buying branded products > lower demand for goods/services > sales and profits fall.
• What are exchange rates?

  The price of one currency in terms of another
• What happens in exchange rates?

  Value of £ falls = cheaper for businesses in other countries to buy UK products

  Value of £ increases = More expensive for business in other countries to buy UK products.
• What impact do exchange rates have?

  Demand for UK products overseas vary resulting in increase/decrease of exports.
• What are social factors?

  Changes in size and distribution of the population, changes in lifestyle and attitude of consumers
• What social factors can occur?

  Family sizes getting smaller, ageing population, consumers are becoming more health concious, increase in car ownership.
• What is the impact of family sizes getting smaller?

  Increased demand for smaller family cars, families have more money to spend on each child.
• What is the impact of an ageing population?

  Products and markets need to be tailored to meet needs of older generation, people work longer past retirment age.
• What is the impact of consumers becoming more health conscious?

  Rise in sales of low fat/sugar foods and drinks, growth of vegan/vegetarian markets.
• What is the impact of increased car ownership?

  Business can set up out of town locations > reduced cost of land/real estate.
• What are technological factors?

  Innovations in process and product technology - firms must keep up with new technology.
• What is the impact if organisations don't keep up with new technology?

  Losing customers, sales and profits.